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Colorado Real Estate National Exam
Practice Exam Questions and Answers
Latest 2026
which of these is a correct formula for calculations
related to income-producing property? Ans: rate of
return x value = net operating income
an optioner and optionee entered into an option contract
for an industrial building. the optionee decided not to
purchase the property. the optioner sued the optionee for
breach of contract. assuming the optioner received an
option fee, what damages will the optioner likely receive
in the lawsuit? Ans: none of these.
explanation: an optioner (owner) receives an option fee
for keeping an offer open while an optionee (prospective
buyer) decides whether they'll buy the property. if the
optionee decides not to buy the property, the optioner
has no legal recourse other than to keep the option fee.
as part of offering a lower-than-market interest rate on a
loan to a borrower, the lender charges a percentage of the
loan amount to increase the lender's yield. this fee is
known as Ans: loan discount points
explanation: loan discount points are charged based on
the cost to buy the lower interest rate, which impacts the
yield the lender will receive over the life of the loan. a
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discount point helps to decrease the loss to the lender
and is an upfront charge at closing.
two unrelated, unmarried friends purchased a parcel of
real estate together and did not specify the form of
ownership they desire. the buyers will hold title as Ans:
tenants in common
efore listing a property, a seller filled in and painted over
several deep cracks in the living room wall. The seller
only tells the broker about the filled-in cracks after the
listing agreement is signed. Now, the seller wants the
listing broker to lie or keep silent about the filled-in
cracks. The seller reminds the listing broker that an agent
owes the principal the fiduciary duties of obedience,
loyalty, and confidentiality. The listing broker should
Ans: terminate the listing
explanation: in most states, a real estate licensee legally
owes third parties the duty of honest and disclosure of
material defects like filled-in cracks. so in this case, the
broker should terminate the listing.
which of these must an owner exclude from a purchase
contract in order to keep it? Ans: a planted rose bush
explanation: once a plant (like a rose bush) has been
planted on the property, it is considered part of the real
estate and transfers with the deed.
The owner of an income-producing residential rental
property asked the property manager to calculate the net
income (NOI) on the property. Each of the 4 units in the
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apartment building rented for $750 a month. The annual
property taxes are $5,000, annual insurance premiums
are $3,000, lawn care and maintenance is $300 monthly
and monthly debt service is $1000. What is the property's
net operating income? Ans: $24,400
calculation:
$750 (monthly unit rent) x 4 = $3,000 x 12 = $36,000
(annual rent)
$300 (monthly lawn care & maintenance) x 12 months =
$3,600
Expenses: $5,000 (property taxes) + $3,000 (insurance) +
$3,600 (lawn care & maintenance) = $11,600
Gross Annual Rent: $36,000 - $11,600 (annual operating
expenses) = $24,400
**DEBT SERVICE IS NOT INCLUDED IN NOI
CALCULATIONS**
A potential buyer was turned down for a mortgage loan
because of the ethnic makeup of the neighborhood where
the property is located, and the high crime rate in the
area. This is an example of Ans: redlining by the lender
© 2025 All rights reserved
Colorado Real Estate National Exam
Practice Exam Questions and Answers
Latest 2026
which of these is a correct formula for calculations
related to income-producing property? Ans: rate of
return x value = net operating income
an optioner and optionee entered into an option contract
for an industrial building. the optionee decided not to
purchase the property. the optioner sued the optionee for
breach of contract. assuming the optioner received an
option fee, what damages will the optioner likely receive
in the lawsuit? Ans: none of these.
explanation: an optioner (owner) receives an option fee
for keeping an offer open while an optionee (prospective
buyer) decides whether they'll buy the property. if the
optionee decides not to buy the property, the optioner
has no legal recourse other than to keep the option fee.
as part of offering a lower-than-market interest rate on a
loan to a borrower, the lender charges a percentage of the
loan amount to increase the lender's yield. this fee is
known as Ans: loan discount points
explanation: loan discount points are charged based on
the cost to buy the lower interest rate, which impacts the
yield the lender will receive over the life of the loan. a
© 2025 All rights reserved
, 2 | Page
discount point helps to decrease the loss to the lender
and is an upfront charge at closing.
two unrelated, unmarried friends purchased a parcel of
real estate together and did not specify the form of
ownership they desire. the buyers will hold title as Ans:
tenants in common
efore listing a property, a seller filled in and painted over
several deep cracks in the living room wall. The seller
only tells the broker about the filled-in cracks after the
listing agreement is signed. Now, the seller wants the
listing broker to lie or keep silent about the filled-in
cracks. The seller reminds the listing broker that an agent
owes the principal the fiduciary duties of obedience,
loyalty, and confidentiality. The listing broker should
Ans: terminate the listing
explanation: in most states, a real estate licensee legally
owes third parties the duty of honest and disclosure of
material defects like filled-in cracks. so in this case, the
broker should terminate the listing.
which of these must an owner exclude from a purchase
contract in order to keep it? Ans: a planted rose bush
explanation: once a plant (like a rose bush) has been
planted on the property, it is considered part of the real
estate and transfers with the deed.
The owner of an income-producing residential rental
property asked the property manager to calculate the net
income (NOI) on the property. Each of the 4 units in the
© 2025 All rights reserved
, 3 | Page
apartment building rented for $750 a month. The annual
property taxes are $5,000, annual insurance premiums
are $3,000, lawn care and maintenance is $300 monthly
and monthly debt service is $1000. What is the property's
net operating income? Ans: $24,400
calculation:
$750 (monthly unit rent) x 4 = $3,000 x 12 = $36,000
(annual rent)
$300 (monthly lawn care & maintenance) x 12 months =
$3,600
Expenses: $5,000 (property taxes) + $3,000 (insurance) +
$3,600 (lawn care & maintenance) = $11,600
Gross Annual Rent: $36,000 - $11,600 (annual operating
expenses) = $24,400
**DEBT SERVICE IS NOT INCLUDED IN NOI
CALCULATIONS**
A potential buyer was turned down for a mortgage loan
because of the ethnic makeup of the neighborhood where
the property is located, and the high crime rate in the
area. This is an example of Ans: redlining by the lender
© 2025 All rights reserved
